After months of negotiations, it appears Fiat Chrysler Automobiles and the U.S. Justice Department may be headed to court over allegations the automaker violated clean-air rules with its diesel vehicles, according to a report in Automotive News.
Citing sources who have been briefed in the potential suit, the article says negotiations are still ongoing between parties to avoid lengthy litigation, but the Justice Department is prepared to file suit – as early as this week – which could expose FCA to significant penalties in excess of $4.5 billion.
At issue are allegations FCA used illegal defeat devices, namely specialized software in computerized systems, to improperly disable pollution controls to improve performance in its diesel vehicles. This is similar to what Volkswagen recently went through which ultimately resulted in an admission of guilt and a $2.8 billion penalty. VW then-CEO Martin Winterkorn resigned following the admission.
FCA CEO Sergio Marchionne denied the allegations on a Jan. 12 conference call, saying "We have no defeat devices.”
The automaker also issued a recent statement saying, in part, that its controls weren't designed to cheat emissions tests like Volkswagen's.
"In the case of any litigation, FCA US will defend itself vigorously, particularly against any claims that the company deliberately installed defeat devices to cheat U.S. emissions tests," FCA’s statement read. "The company believes that any litigation would be counterproductive to ongoing discussions with the U.S. Environmental Protection Agency and the California Air Resources Board."
The EPA alleged in January that the automaker sold 104,000 Jeep Grand Cherokee SUVs and Ram 1500 pickups with diesel engines containing "auxiliary emissions control devices" that FCA failed to disclose to the agency.
Auxiliary emissions control devices are permitted under the Clean Air Act as long as they're disclosed and explained in detail within applications carmakers file with the EPA.
Some of these controls "appear to cause the vehicle to perform differently when the vehicle is being tested than in normal operation and use," the EPA said in its notice. EPA test data, it says, showed that the vehicles produced high levels of nitrogen oxide pollution under certain conditions.
The alleged violations, per the EPA, carry potential penalties of up to $44,539 per vehicle. That translates to a penalty of up to $4.6 billion based on the number of vehicles involved.
Marchionne also addressed the diesel issue again last month. "We may have made mistakes" on software disclosure, he said, though Fiat Chrysler "never tried to break any rule."
FCA and EPA officials have been in talks to resolve these issues since January, and those talks continue, Automotive News says in its report.
